eco final
(37)Which is a factor that can cause a change in supply? A) technology B) number of consumers C) consumer income D) tastes and preferences
A
A nation has a population of 260 million people. Of these, 50 million are retired, in the military, or in institutions. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate? A) 6 percent B) 4 percent C) 27 percent D) 9 percent
A
An increase in the demand for loanable funds will occur if there is A) an increase in expected profits from firm investment projects. B) an increase in the nominal interest rate accompanied by an equal increase in inflation. C) an increase in the real interest rate. D) a decrease in the real interest rate.
A
Due to automatic stabilizers, when income rises, government transfer spending: A) decreases and tax revenues increase. B) increases and tax revenues decrease. C) and tax revenues increase. D) and tax revenues decrease.
A
If demand for a good increases and supply remains constant equilibrium price: A) and quantity will both increase. B) and quantity will both decrease. C) will increase, and equilibrium quantity will decrease. D) will decrease, and equilibrium quantity will increase.
A
In an aggregate demand and aggregate supply graph, a contractionary fiscal policy can be illustrated by a: A) leftward shift in the aggregate demand curve. B) rightward shift in the aggregate demand curve. C) movement along an existing aggregate supply curve. D) rightward shift in the aggregate supply curve.
A
In an economy, the government wants to increase aggregate demand by $36 billion at each price level to increase real GDP and reduce unemployment. If the MPC is .75, then it could: A) reduce taxes by $12 billion. B) reduce taxes by $10 billion. C) increase government spending by $18 billion. D) increase government spending by $12 billion.
A
Inflation is a rise in: A) the general level of prices over time. B) real GDP. C) industrial production. D) the standard of living over time.
A
The economy is in a recession. The government enacts a policy to increase spending by $2 billion. The MPC is .8. What would be the full increase in real GDP from the change in government spending assuming the increase would be in the horizontal range of the aggregate supply curve? A) $10 billion B) $16 billion C) $6 billion D) $8 billion
A
The response of investment spending to an increase in the government budget deficit is called A) crowding out. B) private dissaving. C) income minus net taxes. D) expansionary investment.
A
(60)A peak in the business cycle: A) occurs when unemployment is widespread. B) occurs when domestic production potential is reached. C) occurs when the inflation rate is its lowest. D) none of the above.
B
A decrease in aggregate demand results in: A) no change in either the price level or domestic output. B) a decrease in the price level and a decrease in domestic output. C) a decrease in the price level and an increase in domestic output. D) no change in domestic output, but a decrease in the price level.
B
A decrease in the interest rate will cause a(n): A) increase in the transactions demand for money. B) increase in the amount of money held as an asset. C) decrease in the amount of money held as an asset. D) decrease in the transactions demand for money.
B
Borrowers are ________ of loanable funds, and lenders are ________ of loanable funds. A) suppliers; demanders B) demanders; suppliers C) suppliers; suppliers D) demanders; demanders
B
Fiscal policy is enacted through changes in: A) unemployment and inflation. B) taxation and government spending. C) the supply of money. D) interest rates.
B
If the Congress passes legislation to cut taxes to counter the effects of a severe recession, then this would be an example of a: A) nondiscretionary fiscal policy. B) discretionary fiscal policy. C) contractionary fiscal policy. D) political business cycle.
B
If the Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n): A) political business cycle. B) contractionary fiscal policy. C) nondiscretionary fiscal policy. D) expansionary fiscal policy.
B
In the long-run, the aggregate supply curve is: A) downward "negative" sloping. B) vertical. C) upward "positive" sloping. D) horizontal.
B
The major component of the money supply (M1) is: A) saving deposits. B) checkable deposits. C) Federal Reserve notes. D) gold certificates.
B
Which are contractionary fiscal policies? A) decreased taxation and no change in government spending B) increased taxation and decreased government spending C) no change in taxation and increased government spending D) increased taxation and increased government spending
B
Which situation causes a budget deficit to have the greatest expansionary effect? A) when automatic stabilizers are effective B) when it is financed by newly printed money C) when it occurs during a period of high inflation D) when it is financed by borrowing from the public
B
(14)Which combination of fiscal policy actions would be preferred if an economy were in a deep recession? A) increase taxes and decrease government spending B) decrease taxes and government spending C) decrease taxes and increase government spending D) increase taxes and government spending
C
(23)The functions of money are to serve as a: A) resource allocator, method for accounting, and means of income distribution. B) factor of production, exchange, and aggregate supply. C) unit of account, store of value, and medium of exchange. D) determinant of consumption, investment, and government spending.
C
(53)Unemployment that occurs when there is deficient demand for the goods and services of an economy is called: A) natural unemployment. B) structural unemployment. C) cyclical unemployment. D) frictional unemployment.
C
A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment? A) cyclical B) frictional C) structural D) wait
C
If demand for a good decreases while supply remains unchanged, equilibrium price: A) will increase, and equilibrium quantity will decrease. B) and quantity will both increase. C) and quantity will both decrease. D) will decrease, and equilibrium quantity will increase.
C
In an aggregate demand and aggregate supply graph, an expansionary fiscal policy can be illustrated by a: A) change in the price level. B) leftward shift in the aggregate demand curve. C) rightward shift in the aggregate demand curve. D) leftward shift in the aggregate supply curve.
C
When real GDP and employment are declining for six months or longer is called a: A) secular trend. B) trough. C) recession. D) business cycle.
C
When the government runs a budget deficit, A) the equilibrium interest rate will fall. B) household savings will fall. C) business investment will fall. D) none of the above
C
When the interest rate falls, the: A) total amount of money demanded decreases. B) transactions demand for money increases. C) total amount of money demanded increases. D) asset demand for money decreases.
C
Which would cause a rightward shift in the supply curve for telephone service? A) an increase in consumer incomes in the economy B) an increase in the wage of telephone workers C) an improvement in telephone technology D) an increase in the price of telephones
C
(45)If the supply of a good decreases and demand remains constant equilibrium price: A) and quantity will decrease. B) will decrease, and equilibrium quantity will increase. C) and quantity will increase. D) will increase, and equilibrium quantity will decrease.
D
Allocative efficiency means that: A) the least-costly methods are being used to produce a product. B) the law of increasing opportunity costs has reached a maximum. C) the amount of other products which must be sacrificed to obtain production of a given product is at a minimum. D) resources are being devoted to the production of products most desired by consumers.
D
Economic growth may be represented by a: A) production possibilities curve which remains fixed. B) point outside (to the right) of the production possibilities curve. C) leftward shift of the production possibilities curve. D) rightward shift of the production possibilities curve.
D
In a capitalistic economy: A) the government owns the means of production. B) markets can never be competitive. C) consumers can never be sovereign. D) there is a reliance on the market system.
D
Money eliminates the need for a coincidence of wants primarily through its use as a: A) store of value. B) unit of account. C) standard of confidence. D) medium of exchange.
D
The rate of unemployment when the economy is at its potential output is called the: A) structural rate of unemployment. B) frictional rate of unemployment. C) full-employment rate of unemployment. D) natural rate of unemployment.
D
Which of the following is an example of an automatic stabilizer? As real GDP decreases, income tax revenues: A) and transfer payments decrease. B) and transfer payments increase. C) increase and transfer payments decrease. D) decrease and transfer payments increase.
D
Which of the following would most likely encourage economic growth? A) a decrease in the government deficit B) an increase in household saving C) a change from an income tax to a consumption tax D) all of the above are likely
D
With a progressive tax system, as the level of income increases in an economy, the average tax rate will: A) remain the same. B) either decrease, increase, or remain the same. C) decrease. D) increase.
D